UAE's Finablr reports 9.1% jump in first-half adjusted income

UPDATE: $200m from IPO has given company extra firepower to execute acquisitions strategy, CEO says, after announcing first financial results since its trading debut in May

"I am delighted to see such a strong set of maiden results from Finablr,” B R Shetty fiunder and co-chairman of Finablr says. Emily Broad for The National

Finablr, a UAE holding company for brands including Travelex, UAE Exchange and Xpress Money, reported a 9.1 per cent year-on-year income growth in the first half of the year, boosted by strong performance by all business segments.

Adjusted income for the six months to June 30 climbed to $742.2 million (Dh2.73 billion), the company said on Tuesday, when it reported its first earnings after a May trading debut on the London Stock Exchange. Adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) also surged, by 27 per cent $103.3m.

The reported loss for the period, however, widened to $30.1m at the end of the first half from $9.5m recorded a year earlier, Finablr said. Although its expenses fell 11 per cent to $537m, its depreciation expense almost trebled to $121.9m, which the company blamed on the adoption of new accounting standards.

"I am delighted to see such a strong set of maiden results from Finablr,” said BR Shetty, founder and co-chairman of Finablr. “Over the last four decades we have built global assets firmly rooted across the payments and foreign exchange markets. Now we are realising our vision to create a global financial platform serving people, companies and institutions all over the world.”

Finablr and the payment solutions company Network International were the two UAE companies that listed on the London Stock Exchange main market earlier this year. Finablr's initial public offering in May, which attracted institutional investors including BlackRock, Columbia Threadneedle Investments and Norges Bank, valued the company at $1.6bn. Its shares were sold at an offer price revised down from the previously indicated range, due to market volatility from the US-China trade war.

Finablr said income during the first half grew across its businesses. Its B2B and payment technology solutions segment was the highest grossing division, which reported a 20.5 per cent adjusted income rise to $161m. Aggregate processed volume across the company climbed to $64.9bn at the end of the reporting period from $56.7bn recorded a year earlier.

Finablr said its net debt stood at $334.1m, down by $230.9m from the end of last year.

The company on Tuesday reaffirmed the guidance and outlook it provided at the time of its IPO, and said over the medium term, it is targeting high single-digit growth in adjusted income. It will be driven by a double-digit growth in the cross-border payments and consumer solutions and B2B and  payment technology solutions segments, which are expected to account for about 50 per cent of the group’s adjusted income.

“Finablr delivered strong results at the upper end of our guidance, with growth in each of our three segments and across our channels and products,” said Promoth Manghat, group chief executive. “We expect to perform in line with the guidance that we shared at the time of our IPO.”

The $200m in proceeds from the public float is being deployed across five business pillars, which include building strategic partnerships, digitising the business, investments in high-growth markets such as Middle East and Asia, community building and acquisitions, Mr Manghat told The National on Tuesday.

During the first half of the year the firm spent $30m on buying a majority interest in BayanPay, a payment aggregation and mobile wallet solutions in Saudi Arabia, and India-based  PEaaS, a product engineering firm. Acquisitions in Saudi Arabia will open significant growth opportunities for the company in the region's biggest economy dominated by a young population, he added.

Mr Manghat said the firm continues to pursue investments and bolt-on acquisitions that could strengthen its capabilities and commercial synergies. Technology will remain the main driver of further acquisitions, he added.

"There is no spate amount set aside for acquisitions but definitely the $200m [from the IPO] has given us the extra firepower in terms of executing the [acquisitions] strategy," he said. "Even before the IPO, we were pursuing that strategy and we acquired nine assets in the run up to the IPO."

The pipeline of M&A deals, he said, is "good" and the company continues to evaluate opportunities.

Finablr said its total capital expenditure climbed to $44m at the end of the reporting period, of which $22m related to technology. Mr Shetty in May told The National the company plans to spend $200m this year on upgrading financial technology platforms on which the currency houses operate.

Mr Manghat on Tuesday said the company is “disciplined in the execution of our strategy as we continued with our technology transformation, created new partnerships and focused on high growth markets”.